TORONTO, October 16, 2018 – According to the Royal LePage House Price Survey[1] and Market Survey Forecast released today, year-over-year home prices made modest gains in many regions across Canada in the third quarter of 2018. The national trend was largely influenced by price appreciation in Greater Vancouver, while property in the Greater Toronto Area experienced continued year-over-year price declines, with modest gains in value when compared to the previous quarter. Meanwhile, the Greater Montreal Area saw the highest year-over-year home price appreciation rate of the three largest Canadian metropolitan areas studied.

The Royal LePage National House Price Composite[2], compiled from proprietary property data in 63 of the nation’s largest real estate markets, showed that the price of a home in Canada increased 2.2 per cent year-over-year to $625,499 in the third quarter of 2018. When broken out by housing type, the median price of a two-storey home rose 1.4 per cent year-over-year to $736,337, while the median price of a bungalow climbed 1.5 per cent to $519,886. Condominiums continued to see the highest rate of appreciation nationally when compared to the detached segment, rising 6.7 per cent year-over-year to $441,240.

Looking ahead, Royal LePage is projecting a further uptick in home price appreciation in the fourth quarter, forecasting a 1.5 per cent increase in the aggregate price of a home in Canada over the next three months.

“Positive economic fundamentals, supported by a new agreement on trade, should bolster consumer confidence across Canada and stoke demand in the nation’s real estate market,” said Phil Soper, president and CEO, Royal LePage. “Dangerously overheated regions have cooled considerably this year, while home prices have remained remarkably resilient. This is the soft landing that policy makers were hoping for.”

“I am concerned that the slower market will cause housing supply issues to be shuffled aside for other priorities,” Soper continued. “The return of runaway home prices in the country’s largest markets remains a real threat. Not this year, but in the near future. Job growth is strong, Canada is attracting more of the best and brightest from around the world and the large millennial cohort is putting increasing pressure on our limited new housing stock. It is imperative that all levels of government address looming supply shortages, particularly in affordable housing.”

After more than a year of intense negotiations, the federal government reached an agreement with the U.S. and Mexico on regional trade. Widely seen as a good outcome for the Canadian economy, the USMCA is expected to be signed into law before year end.

“More confident that their jobs are secure, the new USMCA agreement has removed a widespread veil of uncertainty that was acting as a drag on large purchase decisions,” said Soper. “On the other hand, the trade deal paves the way for the Bank of Canada to raise interest rates. Overall, this is a positive development for housing industries on both sides of the border.”

The Canadian economy is on solid footing, although 2018 is staged to see a lower expansion rate when compared to last year. Double-digit home appreciation has disappeared from the Greater Toronto Area or Greater Vancouver real estate markets. Price appreciation in the Greater Montreal Area is strong, but nowhere near the extremes witnessed in the GTA and Greater Vancouver. Condominium prices in the City of Toronto and City of Vancouver regions have also moderated.

“After a number of years where our major real estate markets were tilted decidedly in favour of home sellers, 2018 has provided relief for many purchasers, particularly first-time buyers,” said Soper. “Our research indicates that the desire to own a home remains strong with younger families. Single-digit price appreciation makes pursuing the dream of home ownership a realistic proposition for many.”

During the third quarter, Ontario continued to see noticeable differences between appreciation rates in the Greater Toronto Area and surrounding Golden Horseshoe cities and beyond. Despite some price relief in the GTA, buyers – particularly young families – from the region are venturing out to other Southern Ontario cities in search of more affordable homes, where price points are still significantly lower. This trend is consistent with the findings of the Royal LePage’s Peak Millennial Survey[3], which found that, nationally, over half (52 per cent) of those surveyed would look to the suburbs when purchasing a property, especially when it comes time to raise a family (59 per cent), while 61 per cent stated that they would be willing to move to another city or suburb where property is more affordable.

Of regions studied in the Royal LePage National House Price Composite, Kingston and Windsor saw the highest appreciation rates in Ontario, rising 14.6 and 14.4 per cent year-over-year, respectively. Meanwhile, regions including Niagara/St. Catharines, London and Kitchener/Waterloo/Cambridge saw strong aggregate price gains of 8.4 per cent, 7.6 per cent, and 6.0 per cent, respectively.

In contrast, over the same period, the aggregate price of a home in the GTA remained relatively flat year-over-year, depreciating 0.4 per cent to $836,402. The City of Toronto maintained solid ground, increasing by a healthy 5.2 per cent, while nearly every suburban region studied, except for Mississauga, posted year-over-year price declines. However, quarter-over-quarter, the aggregate price of a home in the GTA rose 1.3 per cent. By the end of the fourth quarter, Royal LePage expects the aggregate price of a home in the GTA to rise to $853,097, a further 2.0 per cent over the third quarter of 2018.

“The GTA is emerging from a housing correction that was triggered by a combination of eroding affordability and government intervention,” continued Soper. “The introduction of the mortgage stress test in particular slowed activity in Toronto’s ‘905’, bringing lower prices to the over-heated suburban region. Quarter-over-quarter trends are pointing to the end of this correctional cycle and the beginning of a modest recovery in the region.”

In Quebec, the Greater Montreal Area housing market remained strong, supported by a robust economy and near full employment. In September, the unemployment rate in Quebec fell 0.3 percentage points to 5.3 per cent, a level well under the national average of 5.9 per cent.

“Quebec’s recent economic performance has ranked among the most impressive in the country,” added Soper. “Montreal remains much more affordable than other major markets. The province is well-positioned to weather the effects of interest rate hikes.”

In the third quarter, the aggregate price of a home in the Greater Montreal Area was $396,909, an increase of 5.4 per cent from the same period last year – a higher rate of appreciation than that seen in both the Greater Toronto Area and Greater Vancouver, and well above the national aggregate percentage increase. During this period, the median price of a two-storey home in the Greater Montreal Area rose 6.5 per cent year-over-year to surpass the half million dollar mark, now sitting at $500,021. Looking ahead, more moderate price increases are expected in the region. The Greater Montreal Area aggregate home price is forecast to increase 0.7 per cent quarter-over-quarter to $399,679 in the fourth quarter of 2018.

With technology, tourism and natural resources expanding at a healthy clip, British Columbia’s economy has continued to outperform most other provinces. The resulting upward pressure on the real estate market has been dampened by the 2018 mortgage stress test and provincial tax policy. Double-digit price increases are no longer the norm for the province, however affordable regions and condominiums are continuing to see significant year-over-year growth.

Higher oil prices, energy activity and exports have boosted Calgary’s real estate market recovery as the median aggregate home price appreciated 3.4 per cent year-over-year in the third quarter. In Edmonton, home price appreciation was relatively flat, decreasing 0.9 per cent year-over-year during the same period.

Despite a rebound in oil and agricultural prices, both Regina and Saskatoon’s real estate markets struggled to retain home values. The median aggregate home price in Regina increased 1.8 per cent while the median aggregate home price in Saskatoon decreased 2.5 per cent year-over-year.

Manitoba’s economy is continuing its modest but upward trajectory. The median aggregate home price in Winnipeg appreciated a healthy 3.3 per cent year-over-year with standard two-storey homes witnessing the largest gain, rising 5.7 per cent during the same period.

All regions studied in Atlantic Canada saw year-over-year home price appreciation in the third quarter. Moncton and Charlottetown posted the highest home price growth, both rising 10.1 per cent year-over-year.

The Royal LePage House Price Survey provides information on the three most common types of housing in Canada, in 63 of the nation’s largest real estate markets. Housing values in the House Price Survey are based on the Royal LePage National House Price Composite, produced quarterly through the use of company data in addition to data and analytics from its sister company, RPS Real Property Solutions, the trusted source for residential real estate intelligence and analytics in Canada. Commentary on housing and forecast values are provided by Royal LePage residential real estate experts, based on their opinions and market knowledge.

About Royal LePage

Serving Canadians since 1913, Royal LePage is the country’s leading provider of services to real estate brokerages, with a network of close to 18,000 real estate professionals in more than 600 locations nationwide. Royal LePage is the only Canadian real estate company to have its own charitable foundation, the Royal LePage Shelter Foundation, dedicated to supporting women’s and children’s shelters and educational programs aimed at ending domestic violence. Royal LePage is a Brookfield Real Estate Services Inc. company, a TSX-listed corporation trading under the symbol TSX:BRE.

[1] Aggregate prices are calculated using a weighted average of the median values of all housing types collected. Data is provided by RPS Real Property Solutions.

[2] Beginning in the first quarter of 2018, seven real estate markets were added to the Royal LePage National House Price Composite. The new regions are smaller markets in Ontario, Alberta, Quebec and British Columbia. Due to the relative size of the markets, any change to the Royal LePage National House Price Composite is expected to be within 0.15 per cent.

[3] An online survey of 1,000 peak millennials (age 25-30), was completed between June 7 and June 14, 2017, using Leger’s online panel, LegerWeb.